The American Opportunity Tax Credit and The Lifetime Learning Credit are two great opportunities to help taxpayers save money. Tax season can be stressful, and these tax breaks may be able to help take off some stress.
According to the IRS, eligible taxpayers who paid higher education costs for themselves, their spouse, or dependents in 2021 may be able to take advantage of two education tax credits.
The American Opportunity Tax Credit is:
- A maximum benefit of up to $2,500 per eligible student
- Students are eligible for the first four years at a post-secondary or vocational school
- Must be pursuing a degree or other recognized education credential
- Partially refundable. Taxpayers could get up to $1,000 back
The Lifetime Learning Credit is:
- A maximum benefit of $2,000 per tax return, per tax return, per year, no matter how many students qualify
- Available for all years of postsecondary education and for courses to help acquire or improve job skills
- Available for an unlimited number of tax years
Students will need to have received a Form 1098-T, Tuition Statement from an eligible institution. To claim the credit, the student or taxpayer must fill out Form 8863, Education Credits with their tax return.
Be sure to consult a tax advisor. Choosing the right tax preparer can be scary for new students or taxpayers, but having someone to help guide you through the tax preparation can relieve some of that stress! These tax breaks are just one way to help college students, among other ways to maximize your tax return.